The last week has seen a tectonic shift in American politics and government. Those of us who opposed the $700 billion bailout have been proved correct, as the entire political, academic and financial Establishment has said what we were saying all along: the scheme to buy mortgage-backed assets is a giveaway to Wall Street, not a solution to a credit crisis. And as I show in my new newspaper column today, maybe that humiliating mistake will - finally - force our government to actually listen to those of us (ie. the majority of the country) that have always opposed Henry Paulson's crony communism.

To start, let me just say I'm a bit bothered by the public ass-covering that has been going on by those who pushed the bailout in the first place. As just one example, Paul Krugman - who I remain a big fan of - supported the bailout, providing the key progressive cover necessary to pass the bailout. Now he's out there - first on Rachel Maddow's show, now in his column today - basically trying to portray himself as a longtime bailout opponent. While I'm glad he's come around, the whole historical revision is gross and disingenuous. It's reminiscent of how millions told pollsters they actually voted for McGovern as soon as Watergate blew up, or - more recently - how lawmakers who made speeches questioning the Iraq authorization bill but then voted for it insisted later that they really opposed the war.

Everyone from Krugman, to David Brooks, to Tom Friedman to Doris Kearns Goodwin, to both presidential candidates, to Steve Pearlstein and his now-laughable Pulitzer prize - the entire political world and punditocracy that berated bailout opponents as stupid, irresponsible, unpatriotic Luddites - has egg on its face. They panicked and bought into Paulson's "somebody do something!" fearmongering that claimed buying bad mortgages was the way to rescue America.

But it's not.

As those of us who opposed the bailout said, the way to deal with a credit crisis is to actually, ya know, deal with a credit crisis, and not use it to enrich Wall Street executives. And the way to do that is to recapitalize banks in exchange for ownership stakes.

As I show in the column, if you exchange taxpayer cash for bad mortgages, all you are doing is making mortgages into cash, you aren't actually increasing bank's total capital - and in not doing that, you aren't adding to their lending capabilities. If, on the other hand, you leave mortgages on banks' books and use taxpayer cash to buy bank stock, you add capital to banks' books, and therefore expand their lending ability - thus aggressively addressing the credit freeze, while also giving taxpayers an ownership stake in any future bank profits.

The bailout bill is designed to let Paulson buy bad mortgages - a move that wouldn't address the credit crisis, but would make his pals on Wall Street very happy because they wouldn't have to give up any future profits or succumb to a government-mandated management house cleaning (thus the term "bailout"). The legislation refused to mandate the recapitalization plan - which is a major reason the bill should have been voted down. Though the bill technically allows Paulson to pursue the recapitalization plan, it doesn't force him to (in fact, his ability to do so is gray - if it is allowed at all, it is only allowed because the bill doesn't outlaw it) - and trusting (rather than mandating) a former Goldman Sachs executive and current Bush official to make a responsible decision with taxpayers' interest in mind is idiotic, because now - with the bill vesting all authority in Paulson - we are at the mercy of this autocrat's whims. And because of that, we've already lost precious time.

So what does that mean for us? What can we do now? As I see it, two things:

1. Demand Congress go back to the drawing board and amend the bailout bill to make the recapitalization plan mandatory. Contact your member of Congress and tell them to reject the quiet efforts to simply expand the price tag of the bailout, and instead force the Treasury Department to pursue the recapitalization plan and scrap the mortgage-buying scheme.

2. In the event that Paulson starts buying mortgages, demand Congress convene hearings that ask Paulson to publicly explain why he refuses to pursue the recapitalization plan. I've been hearing that these kind of hearings are in the works - but at the very least, we need to force King Henry to tell us why he thinks giving away $700 billion to his friends on Wall Street is a better way to deal with the situation than buying bank stock.

Finally, I'm hopeful that as this economic turbulence inevitably increases, the progressive movement - and the country as a while - listens more to the experts like (to name a few) Dean Baker, Rob Johnson, Andy Stern and George Soros who have been right all along about the failure of this bailout, rather than only listening to those who either led us into this disaster (Democratic and Republican deregulators, Wall Street execs) or were apologists for or proponents of a bailout bill that is aimed at making this situation worse (Henry Paulson, Democratic and Republican congressional leaders, most pundits, and a whole slew of progressive economists).

In short, I'm hopeful that we will have finally learned the lesson we should have learned during the lead-up to and aftermath of the Iraq invasion - that continuing to put our blind trust and faith in those who advocated or provided cover for a mistake is, unto itself, the biggest mistake of all, and that we should be listening to those who have a proven track record of being right. Like millions of Americans, I've lost a big chunk of my life's savings (about 15 percent) thanks to political parties, government officials and a progressive movement that has listened to the same old voices. It's time for new voices - and a responsible policy.

You can read the full column here.

The column relies on grassroots support, so if you'd like to see my column regularly in your local paper, use this directory to find the contact info for your local editorial page editors. Get get in touch with them and point them to my Creators Syndicate site. Thanks, as always, for your ongoing readership and help contacting local editors. This column couldn't be what it is without your help.

A new ad by a group which claims to be interested in campaign finance reform attempts to reignite the non-issue of Bob Schaffer’s fact-finding trip to the Marianas Islands
in 1999.

The group, Campaign Money Watch is funded by unions and acts on their behalf. Here’s a USAToday story demonstrating this group’s ironic claim to be against the influence of
money in politics. They’re taking millions from unions and using it all to attack Republicans. Basically, their argument is that 527 groups should be able to raise and spend as they wish while candidates should be substantially restricted.

Campaign Money Watch is a project of another left-wing 527 called
the Public Campaign Action Fund (which keeps their donor list secret) and has taken money from a liberal PAC founded by a co-founder of MoveOn.org as well as recently receiving $150,000 from one apparently very wealthy donor who gives large amounts to large numbers of Democratic candidates and organizations.

It’s interesting to see this union front group bring up these bogus claims again just days after the appearance of the should-be-convict Allen Stayman at Schaffer’s campaign office.

This is nothing more than a push by labor unions through their
surrogates to get Mark Udall elected because of the two candidates’differing positions on “card check”, a legislative proposal which would eliminate the secret ballot currently required for unionization. Udall supports the measure which would let unions intimidate workers into signing unionization cards. Even George McGovern is adamantly opposed to the Orwellian “employee free choice act”. So is Bob Schaffer. I
believe that unions are supporting efforts by their henchmen to attack Schaffer with anything and everything.

So, let’s look at the letter which the union and Democrat front group, Campaign Money Watch, sent to Bob Schaffer:

They ask Schaffer “To which sweatshop are you referring and what evidence do you have that it was shut down?”

I’ve probably done more research on this issue than almost anyone else, so I will respond to their question.

The sweatshop was called Little MGM, and if the union henchmen had done a little homework, they would have seen that Schaffer testified about that sweatshop before the House Committee on Resources in 1999: (See page 183 of the printed document, page 187 of the PDF file.)

And I have to tell you, Mr. Chairman and Committee, of one of the
most amusing things we saw. The worst factory we went into was the Little MGM, as it’s called. After we went through the tour, the manager
there was kind of annoyed that we were there. We
kept him off to the side and didn’t let him follow us around and that’s
where some of the worst pictures you’ll see in here are in his factory.

Schaffer said (on the prior page) that it was Chinese (Hong Kong)-owned, though he didn’t name the owner.

Schaffer’s seriousness about his investigation and the fact that he
was not turning a blind eye as his political opponents are claiming was made clear in his testimony:

My experience was not the same as those who said they had been there and found things to be wonderful. I found a number of specific factories and specific incidents that I found to be offensive and believed they need some attention, clearly. Those issues I’ve discussed with a number of people and, for my part, my five-day investigation is not over. This hearing is certainly part of it and there’s still a lot of documents that we’ve requested that we have yet to receive.

In my research for my series of articles called “Bob Schaffer and the real CNMI story”,
I had two conversations which confirmed Bob Schaffer’s assertion that he was a contributing factor to the closing of Little MGM.

One conversation, with a source who agreed to be interviewed on the condition of his name not being used, works for the CNMI government and has been involved in garment industry issues for many years.

He told me that Little MGM had been the subject of other complaints and visited by other politicians and federal government officials. He
said that Schaffer’s complaint was the strongest offered by any
visitors from Washington D.C.. He concluded by saying that while Little MGM would probably eventually have been closed by the government in any case, Schaffer’s complaint definitely sped up the process. Schaffer’s complaint ensured that the factory was closed, or at least got it closed much faster than it otherwise would have been.

Later, I interviewed Ben Fitial, the Governor of the CNMI who told me the same story of Schaffer’s far more thorough and serious investigation of Saipan’s garment factories than any other federal official had ever conducted as well as the influence of Schaffer’s criticism of Little MGM in forcing the government to act to close it down.

Campaign Money Watch claims that they “have not been able to find
evidence that (Schaffer) had any involvement in helping to shut down any sweatshop…” I wonder just how hard they tried to find such evidence. Anyone want to wager on that?

[That said, I admit I do not have “proof” other than the words of
those two men that the factory was closed. For now, that’s good enough
for me.]

They also try again to use the Abramoff bogeyman to tar Schaffer
although it’s been shown that Schaffer’s staff did everything possible to verify that Schaffer’s fact-finding trip was NOT paid for by Abramoff, including submitting the trip for clearance to the House Ethics Committee prior to Schaffer’s going on the trip. Yes, Abramoff was working for the CNMI government as a hired lobbyist. But trying to tie Schaffer to that is without basis in fact. There is no evidence that Schaffer had or wanted to have any connection with Abramoff or his firm. Did Campaign Money Watch not notice that it was Mark Udall, not Bob Schaffer, who received campaign contributions from Abramoff, and who supported Abramoff’s position regarding casinos on Indian reservations…until the contributions from Abramoff stopped?

(These two articles reference the Udall-Abramoff connection:
http://www.rockymountainnews.com/news/2008/apr/16/udall-accepted-money-firms-associated-abramoff/
and http://www.denverpost.com/ci_8952964?

The letter from Campaign Money Watch and its accompanying television commercial are lies disguised as questions. Indeed the whole group is just union thuggery disguised as concern for clean elections. Is there nothing that unions and their surrogates won’t stoop to in their quest for power? (Don’t answer that…the answer is too obvious for you to get credit for getting it right.)

If Mark Udall were our Senator, he would be doing the bidding of
these reprehensible groups rather than standing up for taxpayers,
workers, free trade, and economic liberty in general So, ironically, this attack on Bob Schaffer demonstrates one of the most important reasons to vote for Schaffer next month.

Last night's presidential debate was certainly John McCain's strongest performance yet.

He attacked Obama, if belatedly, and emphasized the difference between their records on spending.

But my reaction to the debate overall was "so what?", and I believe the debate was effectively a negative for McCain's electoral chances in the sense that he really needed a big win.

The town hall format should have benefited him, and he did reasonably well, but Barack Obama has clearly increased his speaking abilities in the absence of a teleprompter.

I watched the debate with my wife, a new American citizen, who is (in my opinion) of slightly more-than-average political and economic understanding, but neither economics nor politics is something she spends much time thinking about.

Her take was that Obama's positions are not smart, his delivery is very smooth and it's easy to imagine people who don't think about taxes or the economy much (until we're in a crisis) believing what he's selling.

She thought McCain's positions were mostly smarter, but he seemed like he could be Obama's grandfather and a time like this requires someone with a lot of energy.

My views were similar but stronger.  Obama simply deflects or lies about some of his most important positions, such as claiming that he's not planning to massively increase spending and not admitting that much of his so-called "tax cut" is really socialism, i.e. the government paying money to low-income people by taking that money from high-income people.  McCain specifically asked Obama how much he would fine employers who don't meet Obama's health care demands and Obama didn't answer.

It is rather remarkable how to what lengths Obama will go to refuse to admit that the surge was a success. I wonder if that implies anything about Obama's personality, i.e. being as bull-headed as people think McCain is.

Obama did not deny McCain's assertion that Obama has voted 94 times to support tax hikes or oppose tax cuts.  That's something that should weigh heavily on peoples' opinions as they consider whether to believe Obama's claims that he'll cut taxes and not increase spending.

Neither candidate offered good answers on entitlement reform, but at least McCain said there should be reform and noted that fixing Social Security is theoretically an easier problem than fixing Medicare. He also noted that future benefits would have to be lower than current benefits.  Obama offered a non-answer about stabilizing Social Security.

A truly important distinction between the candidates came when they were asked whether health care was a right or responsibility.  McCain said the latter, Obama the former. This is a very big deal and deserved a lot more discussion during the debate.  This idea that everything under the sun is a "right" because we're a rich country is precisely what will end up causing us to no longer be a rich country. It represents Obama at his most dangerous.

McCain had some very strong points when he argued about taxes and spending, but he said a few things which I thought were just terrible. First, he again blamed the current financial market troubles on Wall Street, which is not the primary source of the turmoil.  (Later, he blamed it on the Democrats' coziness with Fannie Mae, but it was the third debate in a row where McCain or Palin let the Democrat blame this mess on deregulation, whereas the real cause was anything but deregulation.)  

Second, McCain said he'd order the Secretary of the Treasury to buy bad mortgages and then renegotiate them at "diminished home values". Not only is this socialist and a completely improper use of government, but it's also stupid.  How many banks do you think will give mortgages knowing that the Secretary of the Treasury (or a judge, as Democrats would like to see) can simply change the terms of a loan...and not just the interest rate, but also the principal amount due.

Third, McCain went on a rant about the "danger of global warming gasses".  Hasn't he noticed that the planet hasn't warmed in a decade?  I've written enough about this subject, so I'll keep my critique here short and sweet: McCain's "cap and trade" legislation is a bigger threat to the American economy than Obama's tax and spend policies.  McCain's legislative "solution" to something that isn't a problem will make the bailout's insertion of the government into our financial system look like outright laissez-faire.

Fourth, it turns my stomach every time McCain is proud of "reaching across the aisle" to Russ Feingold, Joe Lieberman, and Ted Kennedy.  Every time he reaches across the aisle, our liberty is diminished. McCain bipartisanship is simply his trying to move conservatives to a liberal position, never the other way around.

McCain still seemed stronger than Obama on foreign policy, but Obama is getting sharper in that area as well, and people are much less focused on Afghanistan than on wondering whether their bank deposits are safe.

Unfortunately they didn't get to discussing free trade. McCain mentioned that Obama would be a protectionist and assumed a question would deal with the topic later, but that question never came.  Obama's views on trade are not just stupid, they're dangerous.  When you hear someone say the believe in trade that is "free and fair", just remember that their definition of "fair" almost certainly means something other than "free".

Overall, the debate was essentially dull.  Tom Brokaw wasted a great opportunity to create an interesting event by choosing from what must have been some interesting questions submitted by the audience in the room and via the internet.  Instead, he chose completely typical questions which turned the town hall into just another series of stump speech sound bites.

And a dull debate, even if you'd call it a tie in terms of pure debating points (or maybe even a modest win for McCain, though I'm sure Obama supporters could argue the other way), in election terms it was a win for Obama.  He showed himself to be plausibly presidential and that was all he needed to do.

I continue to maintain that John McCain could have helped both his nation and his electoral chances by opposing the bailout, especially all the other junk that was attached to it.

My view has been slowly but surely crystallizing around what my gut instinct has been for most of the year. The economic crisis has cemented my view:

Obama will be a terrible president. His positions are anathema to fundamental American principles. But John McCain is not better enough to be supportable, particularly in the very important areas of economic understanding and "climate change". The GOP should be made to think that they can give us a candidate as flawed as John McCain and win.  Furthermore, the economy is going to be bad for a couple of years.  No politician will be able to help that.  We might as well let the Democrats wear it.  Yes, they'll work hard to say that the crisis started under a Republican president. But I don't think most voters are putting this at the feet of George W. Bush. Republicans will be able to make a strong case for tax cuts and spending cuts, and will do well in the 2010 elections.

Barack Obama stands a real chance of being the second Jimmy Carter.  Maybe his presidency will be the catalyst for the appearance of the next Ronald Reagan who, while not without his flaws, was certainly the best president of my lifetime.

With the entire economic world in meltdown thanks to so-called "toxic mortgages" and exotic securitized instruments, I've been wondering about my own mortgage.

My husband and I have one of those vanilla 30-year fixed rate mortgages on our circa 1911 house in the Park Hill neighborhood in Denver. We bought the house in 2000, when it seemed there was no limit to how high housing prices would go. We refinanced twice in those early years to take advantage of interest rates that at the time were dropping.

Our mortgage has changed hands several times over the years. For the last several, I've been sending our electronic payment, month after month to Citimortgage. But it strikes me I know very little about how Citimortgage manages it. Is it possible that our loan, as safe a risk as it is, has been held in one of those pools we keep reading about-the ones that securitized instruments are based on and then traded? Was there any way I could find out?

I called the Citimortgage corporate headquarters in New York City and spoke to spokesman Mark Rogers. He obligingly did some digging for me and a few hours later told me that while Citimortgage services our loan, our mortgage is now owned by.....Freddie Mac.

Who knew? Nowhere on my monthly statements does it say: "Your mortgage is now owned by Freddie Mac." Rogers couldn't say what Freddie Mac had done with our mortgage-whether it has sliced it and diced it into some sort of complex security instrument.

My guess is most people out there are equally in the dark. Whither our home mortgages? None of us know. Meanwhile, our representatives in Congress, who depend on the financial sector to fill their campaign coffers, did little in the way of oversight of the industry. Federal agencies let the banks run wild. And now we're getting a crash course in how what we don't know is hurting us, to the tune of a $700 billion taxpayer bailout and counting.

For a light but substantive review of all the issues on this year's crowded ballot, check out the debate in my hometown of Backbone, Colorado, between rancher Rob Rightley and lawyer Lou Leftwich.  (With me stage-managing, you can guess who won.)  Their exchange is written up in my latest Denver Post column, linked here.

A voter guide with the same recommendations, one conservative's cheat sheet for busy Coloradans who misplaced their Bluebook, is also available here.  Send the link to family or friends, or print out for handy reference.  Disagree with me on some or all, it won't hurt my feelings, but whatever you do, participate!

I had gotten distracted from finishing my series on "Bob Schaffer and the real CNMI story", what with all these interesting political and economic events to write about (and to try to trade).

But the appearance of one of the true villains of the story last week reminded me that I needed to finish the series.  The first of the final four articles in the series is now available HERE.

Allen Stayman showed up at Bob Schaffer's campaign office accusing Bob Schaffer with the usual bogus charges that many people heard from Denver Post reporter Mike Riley in his series of attack pieces in April.  

I believed then and now that Stayman was directly or indirectly Riley's source, but of course we'll never know.

Allen Stayman should be in prison. Instead he's on the payroll of the Federal Government as a staffer for the Democratic chairman of a Senate Committee.

So, I have written the final four installments of my series on this issue.  The first of the final four stories is available on my web site today, with the next three coming up each of the following three days.

Here's the link to today's article, and I'll post reminders here for the next few days fot those of you who might care to read all of the articles:

http://www.rossputin.com/blog/index.php/2008/10/06/bob-schaffer-and-the-real-cnmi-story-par-7

 

One of what I considered to be the most important arguments against the “financial system stabilization” bill is that it would let people who either don’t understand economics or hate capitalism, such as American “progressives” or socialist dictators elsewhere claim that free markets have failed in the United States, which is, of course, an outright lie.

But leave it to David Sirota to prove that argument right within hours of the bill’s passage.

Sirota’s note of October 3, called “Bailout is capitalism murdering democracy” is a remarkable work of Orwellian progressive-speak.  Black is white, war is peace, and the corruption of Fannie Mae through Democratic congressional regulation (and their blocking of oversight regulation) somehow represents failure of a free market.

The idea that this bill is rescuing a fundamentally capitalist system is a joke. The idea that the bill itself represents capitalism is a dangerous joke.  And the idea that the bill is murdering democracy turns history on its head.  Instead, democracy, in the form of Americans with no understanding of economics or others like unions whose interests are in destroying capitalism voting for people like Barney Frank, Chris Dodd, and most of the current Democratic leadership, have murdered capitalism, or at least severely wounded it.

Sirota’s attempts to conflate what’s going on here with what happens in China, a system he calls “authoritarian capitalism” actually insults China, economically speaking. The Chinese are only baby steps away from being a brutal communist dictatorship. Still, they realize that they need free markets (which they interfere in enough to make sure the Communist Party keeps all political power.) The fact that anyone could compare the US to the PRC without being laughed out of the room is quite damning for what the US has become in recent years…mostly due to people who think like Sirota. Better examples of authoritarian capitalism are Singapore and now Hong Kong (since the British ceded it to the Chinese.)  These are substantially authoritarian places politically, but especially in Singapore and Hong Kong, their economic systems are freer than ours.  

Sirota proves that he doesn’t understand America when he says that we have a “reliance on institutions rather than individuals.” That might be true only in the area of politics, where we revolted against a king to produce a republic with a relatively stable system of government with the well-known “checks and balances.” Still, it is only a liberal who would say that we as a nation have a reliance on institutions, in part because that’s what liberals themselves do and in part because they want that statement to be true because they believe (correctly) that reliance on institutions helps Democrats gain power.

Sirota argues that the bailout bill demonstrates that we’re moving to reliance on an individual (the Treasury Secretary) much as one man was given substantial control over Iraq just after the overthrow of Saddam.  But he is completely wrong…again.

Yes, the Treasury Secretary will have a lot (too much) power under this bill.  But that’s not why Congress supported it, and I would bet money that most Americans don’t realize the power it gives Paulson and successors.  They probably think some amorphous combination of the Fed, the Treasury, and Congress will be handling the financial aspects of the bailout bill. And they’re substantially correct because nothing this big will get done without tremendous consultation. And then the Feds will have to use outside firms to actually manage the process.

So this bill does not represent a move by the American people toward authoritarian capitalism. It does, however, represent a move by Congress to massively and semi-permanently increase the role of government in our financial system.

What an ironic turn of events, given that the problems we’re facing now were not caused by any of the bogeymen claimed by Democrats: This mess was not caused by deregulation, a lack of oversight due to the Bush Administration, tax cuts, or even “Wall Street greed”.  No, it was caused by the Democrats turning Fannie Mae and Freddie Mac into the enforcement arm of their “affordable housing” scheme…a scheme meant to buy them votes in perpetuity because low income people would always have to thank the Democrats for their being able to own a home.  Fannie and Freddie in turn forced banks to make loans, under threat of certain decertifications and under threat of being called “racist” if they didn’t make loans to minorities, no matter how unqualified they were for the loan.  This was anything but a free market.  It was socialism. 

Be very clear: The government tells banks to issue loans to people who don't qualify, and the government guarantees those loans.  Socialism, period.

Adding to the problem were two huge factors:  First, the implicit government guarantee of Fannie and Freddie. Second, the AAA ratings given to mortgage securities by Standard & Poors and other ratings agencies, although even those firms must be given a little break on guilt because they too were relying on the government guarantee.  If you believe that a Federal Government guarantee is worth anything, then it’s pretty hard to blame investors, “Wall Street” or anybody else for trading and investing in mortgage securities as if the underlying assets were rock-solid.  When you buy a new car and the engine fails during your warranty period, do you go into the dealership’s service department wondering whether they might arbitrarily say “sorry, we’re not going to honor your warranty”? Of course not. The quality of the warranty could actually have one of your major factors in deciding to buy that particular brand of vehicle. And so it was with mortgage securities.

Of course, there were some serious mistakes made by Wall Street, including using excessive leverage to try to keep up with other firms. Firm A would start using some leverage, then would show some level of returns on capital, and Firm B would then feel pressure from its underperforming stock price to lever-up-to-catch-up.  Still, you have to give them a little break on calling them stupid or reckless because they were relying on the equivalent of the new car warranty.

It should also be pointed out that the actual bad mortgages were almost never made by Wall Street banks.  They were made by small or medium-sized local banks, or by mortgage companies like CountryWide (home of the sweetheart mortgage for Democratic politicians).  Mortgage securities eventually made their way to Wall Street and into mutual funds, hedge funds, and every other sort of investment vehicle.  But where else should securities be traded other than Wall Street?  Wall Street was as much the victim here as the villain.  But you never hear that on TV.

All you here is the outrageous lies of Democrats that this was the fault of deregulation. That is simply a lie. It was the fault of specific regulation put through by Democrats.  They say it was the fault of a lack of oversight and they blame that on President Bush. That’s outrageous, too, as the Administration and legislators tried multiple times to bring stricter oversight to Fannie and Freddie, only to be blocked by Congressional Democrats who were reaping large campaign contributions from the GSEs.  You hear that the bailout is handing money to speculators. If that were the case, the bailout wouldn’t be happening. Instead, the bailout represents the mistaken belief that everything will just be OK if government keeps people in home ownership who should be renting and that the market can’t sort itself out, even if with some pain, if just left alone. Of course, while Sirota decries the bill, that attack on free markets is exactly what he wants you to believe is true. 

Fannie and Freddie were the homes of two of the biggest accounting frauds this nation has seen, Enron-like in scale, mostly under the leadership of prominent Democrats.  Franklin Raines, friend of Clinton and Obama, should be in prison right now after presiding over much of that fraud and leading Fannie into the biggest fine ever issued by the SEC. Instead, he was offered a sweetheart deal to get out of charges, including having insurance pay almost all of his $30MM settlement.

Sirota and I actually agree that the President has acquired too much power in recent years and that Congress has been complicit in that power grab.  However, I don’t think this is as much a “national religion” as it is a lack of confidence in Congress as well as a fairly typical reaction of people throughout history during war time.

But then he reverts to claiming that the bill represents capitalism crushing democracy. The last thing any real capitalist wants was this bill.  The last thing any real capitalist wants is the centralization of economic power in the hands of one man, one organization, or the government.

There’s a reason the presidential candidate for the American Socialist Party was on TV this weekend “embracing” the bailout as “a first step toward nationalizing our financial system.”

Sirota does have one important thing right: The bailout bill is horrible. It’s exceptionally dangerous for our future. But his claim that the bill represents capitalism murdering democracy is, as I said before, Orwellian double-speak, as Sirota tries again to blame capitalism for the failures of big government and the devastating impacts of social engineering.  

If you want to find a place for blame for the current mess, look directly at people like David Sirota and the politicians whom he and other progressives support. They hate free markets, hate capitalism, hate people earning profits, and they’ve convinced you to hate those things too, so you’ve voted for Democrats and now we’re reaping the whirlwind.

That said, I must add that what we’re going through is an incredible indictment of the Republicans’ destruction of their brand through corruption, over-spending, and incompetence for the first part of this decade. The likelihood of a President Obama and even greater Democratic control over congress says far more about the horrible state of the GOP than anything good about the Democrats.

I fear greatly for the country over the next several years. It will be like the Jimmy Carter years all over again.  The only good news is that it took a Jimmy Carter to allow for Ronald Reagan.

The United States has always struggled to balance its capitalist economy with its democratic ideals. We've spent the last many years telling ourselves that the two go hand in hand, only to watch capitalism thrive in China in the absence of democratic freedoms. Indeed, if there's been any lesson the last few years, it is that authoritarian capitalism - rather than democratic capitalism - may be the dominant ideology of the 21st century. And as I write in my newspaper column this week, that ideology may be coming to America.

The Wall Street bailout bill is a lot of things - a giveaway, a heist, a legislative manifestation of crony corruption. But it's structure is pure authoritarian capitalism. Whether you think handing over $700 billion to speculators will help our economy or not (and many economists believe it will hurt it), it is undeniable that this bill vests authoritarian power in the hands of the Treasury Secretary - and that is a radical departure from the fundamental tenets of our democracy.

What has differentiated America from other countries is our reliance on institutions rather than individuals. When we have faced crises, we have built institutions (think about the alphabet soup agencies out of the New Deal), not czars. That's what democracies do - they build nations of laws and institutions, not cults of personality.

This is clearly changing now. We saw Paul Bremer appointed monarch of Iraq after the invasion and we see Congress about to hand over its power of the purse to Henry Paulson so that he can be the financial despot, free to buy and sell whatever securities he feels like, with almost no oversight.

Perhaps this reflects a wider trend. We have become a country that has one national religion: presidentialism. That's the religion that says the president is an all-powerful deity - and the Oval Office is a position that is the only one that matters. That this outlook is fundamentally undemocratic and offensive to the principles of our Founding Fathers seems completely forgotten. We have embraced czarism with the zeal of cult worshipers - and now this zeal has global economic forces at its back.

We are trying to economically compete with anti-democratic forces that can make financial decisions without any public input at all. As we saw with the debate over the bailout bill, the transnational corporate elite tell us our democracy and its careful deliberations are hurting our ability to make quick decisions in this global market - and therefore that democracy must be subverted to the will of capitalism. Thus, a bill is rushed through Congress in a week that hands 5 percent of our entire economy to one man, Hank Paulson.

What will be the effect of this tectonic shift? It's hard to say, but with both parties endorsing the shift, we have to first and foremost realize that it is real. Capitalism is trying to euthanize democracy in the name of economic competitiveness - and that is going to make this country a very different - and in my opinion, a much scarier - one from what it once was.

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Over the last few days, I've explored a number of explanations as to why Congress seems determined to pass a wildly unpopular Wall Street giveaway at a time of exploding budget deficits, and at a time when so many credible experts say the giveaway doesn't address our fundamental economic problems. Yesterday I took to CNN to analyze some of these explanations (video clip here):

Look, we know that forces of corruption are looking to profit off such a bailout, we know that fearmongering about a second Great Depression is supercharging the situation. We know that both parties have helped create this crisis - whether it was John McCain championing regressive economic policies, or Bill Clinton bragging in 1994 that "we have deregulated banking." We also know that the elite punditocracy - as it did in pushing the Iraq War - is reliably repeating, and refusing to question, what its ruling class sources are telling it.

As I will show in my newspaper column tomorrow, if the bill passes, it will represent the triumph of capitalism over our basic democratic ideals. But, for a moment, let's ponder one other possible explanation for why Congress is even considering this bill.

Is it possible America has become a Crazy-ocracy? That is, is it possible we aren't ruled by merely the stupid (an Idiocracy) or the corrupt (a Kleptocracy) - we are ruled by genuinely insane people?

I don't mean this as a flippant joke - I'm dead serious about this, as is former Bush Treasury Secretary Paul O'Neill today.As Bloomberg News reports, O'Neill said the $700 billion Paulson plan is "crazy" with potentially "awful" consequences for the economy. "Doesn't this seem like lunacy to you?" he asked.

Well, yes - actually it does, and not just to me, but to many of the nation's leading economists, financial analysts, business journalists, and investors. Many of these people say this bailout could actually make this situation far worse, and many of them also have terrific, commonsense, and historically proven ideas about how to structure an economic rescue package (the newest one is from The Nation's William Greider). Indeed, most bailout proponents (like Paul Krugman) acknowledge this plan will likely be unsuccessful and that the public advocates for it haven't explained how it will work. Yet, many of those proponents - especially those in Congress - say they support it anyway because of the ultimate ideology of the truly psychotic: Namely, that somebody has to do something, no matter what that something is. They are pulling the classic move we saw during the lead-up to the Iraq War - officially supporting it, but also giving speeches of skepticism so they can cover their asses with "I told you so" haughtiness in the future (and please, don't even try to justify this bill as a respectable bargain - spending 5 percent of our entire economy - $700 billion - in exchange for a few small but admirable renewable energy tax credits is not a good deal...I've heard of thinking minimally, but that's thinking microscopically).

And yet, the political system seems totally immune - even hostile to - basic sanity. O'Neill and Joseph Stiglitz, both bailout critics, are top advisers to Barack Obama on this bailout issue, but the Democratic nominee keeps insisting that it is unpatriotic to oppose this bill. John McCain is even crazier - saying that the bill is going to "put us on the brink of economic disaster" right after he voted for it. And worst of all, both Obama and McCain are insisting that the bill just hasn't been sold properly as a "rescue" instead of a "bailout" - the implication being that public opposition is borne out of stupidity rather than sanity.

O'Neill says part of the problem is that those running the asylum in the media and in the halls of Congress have little direct contact with the sane world. "I honestly don't think they really understand it and they're so much in a bubble that it's impossible to penetrate it," he said.

So as the House prepares to vote Friday on this bailout, the public has to burst through that bubble. Republican Sen. Bob Bennett (R) - a bailout supporter - has already inadvertently given us our marching orders. On MSNBC this week, he said the determining factor in whether this bill passes the House will be phone calls to House members' offices. So it's time to sign this CAF anti-bailout petition and then get on the phone to your Member of Congress and tell them loud and clear: America is a Democracy, not a Crazy-ocracy, and that means rejecting this bailout bill once and for all.

Cross-posted from OL and CAF